APWU: Postal Reform Scored by Congressional Budget Office

Reports a Positive Financial Impact of H.R. 756 on Federal Budget

6/02/2017Yesterday, the Congressional Budget Office (CBO) published its report on Postal Service Reform Act of 2017 (H.R. 756). It is standard practice for the CBO to “score” pending legislation introduced into Congress in order to report its impact on the federal budget. They estimate that H.R. 756 would result in a savings of $6.2 billion over the next ten years.

These savings are technically “off-budget” because the USPS’ cash flow is recorded in the federal budget (in the Postal Service Fund) is classified as “off-budget.” The cash flow for the Postal Service Retirement Health Benefit Fund (PSRHBF) is classified as “on-budget.” The net “on-budget” cost of the legislation is only $0.2 billion.

“The score for H.R.756 has improved since the last version of the bill in the 114th Congress,” said Legislative and Political Director Judy Beard. “We are encouraged by the positive changes that have been made in the legislation and will seek continued improvements as the bill moves forward.”

The bill is now off to two House of Representatives’ committees: Ways & Means, chaired by Kevin Brady (R–TX-8) with ranking member Richard Neal (D-MA-1) and Energy & Commerce, chaired by Fred Upton (R-MI-6) with ranking member Bobby Rush (D-IL-2).

In both committees the bill must be approved in order to be voted on by the full House of Representatives. Then the legislation will move to the Senate for a similar process.

The APWU continues to support H.R. 756 in its present form and is working with legislators to make improvements. This legislation is crucial to ensuring a robust future for America’s public Postal Service.

Be sure to check the Postal Reform Legislation page on apwu.org regularly for updates and information about of H.R. 756 and H.R. 760.

H.R. 756, Postal Service Reform Act of 2017

6/1/17 – H.R. 756 would change the laws that govern the operation of the Postal Service (USPS), restructure how the federal government pays for health benefits for federal employees and annuitants, and alter how the federal government calculates the contributions that agencies make for retirement benefits.|

 Major provisions of the bill would:
  • Permit the Postal Service to raise rates on certain mail categories (direct spending savings of $8.6 billion);
  • Authorize the Postal Service to phase out delivery of mail directly to business customers’ doors (direct spending savings of $2.0 billion);
  • Establish a new health benefits program for Postal Service employees, annuitants, and their dependents (net direct spending costs of $4.5 billion and discretionary savings of $1.9 billion); and
  • Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits, (net direct spending costs of $0.1 billion, and discretionary costs of $1.5 billion).(1)

Effects on the Federal Budget

CBO estimates that enacting H.R. 756 would reduce direct spending by about $6 billion over the 2017-2027 period; therefore, pay-as-you-go procedures apply. Enacting H.R. 756 would not affect revenues.

The total changes in direct spending over the 2017-2027 period are split between net off-budget savings of about $6.2 billion and net on-budget costs of about $0.2 billion. (USPS cash flows are recorded in the federal budget in the Postal Service Fund and are classified as off-budget, while the cash flows of the other accounts affected by H.R. 756 are classified as on-budget.)

In addition, CBO estimates that implementing H.R. 756 would lead to discretionary savings of $0.3 billion over the next 10 years, subject to appropriation actions consistent with that estimate.

CBO estimates that enacting the legislation would not increase net direct spending or on-budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2028.

Effects on State, Local, and Tribal Governments, and on the Private Sector

By increasing postal rates for public and private entities, H.R. 756 would impose intergovernmental and private sector mandates, as defined in the Unfunded Mandates Reform Act (UMRA), on public and private entities that send certain mail through the Postal Service. Additionally, the bill would impose a private-sector mandate on some postal annuitants by requiring them to enroll in Medicare, if eligible. CBO estimates that the annual cost to public entities of increasing the postal rates would exceed the threshold established in UMRA for intergovernmental mandates ($78 million in 2017, adjusted annually for inflation) in each of the first five years after the rates become effective. CBO also estimates the aggregate annual cost to private entities of complying with the mandates would exceed the threshold established in UMRA for private-sector mandates ($156 million in 2017, adjusted annually for inflation) in each of the first five years the mandates were effective.

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  1. This estimate reflects a notice of proposed rulemaking published by the office of Personnel Management in December 2016 to use demographic data specific to Postal Service employees to calculate certain retirement benefits. If that rule is finalized before enactment, this provision would have no cost.

5 thoughts on “APWU: Postal Reform Scored by Congressional Budget Office

  1. According to the CBO report this bill provides the lions share of direct spending savings ($8.6 billion) due to a rate increase. The second biggest savings comes from reducing service by eliminating mail delivery to business customers doors which has $2.0 billion of savings. Reducing service is a questionable and dangerous strategy. Even more dangerous and damaging, the proposed health benefits program has a direct spending cost of $4.5 billion and in addition to being a cost and not a savings would be devastating to some retirees forced to enroll in Medicare Part B even if they don’t want or need Medicare coverage. Combine the hurtful impact on retirees with a $10.7 billion cost impact to Medicare make the health care provision a loser for everyone. At least postal management is consistent, pick a loser and go with it, regardless of how it hurts your business or employees. Not sure why the unions are buying in, but best guess is that they see their sponsored health plans becoming more profitable for them. Just like management they are putting profit before people,

    Most interesting is the fact that postal health care payments for retirees will be recalculated this year and every indication is that the recalculated payment plan (due from OPM this month) will require payments (prefunding and normal) of about $3.6 billion annually which is only slightly more ($300 million) than the USPS actually paid during past years. Also, the PRC is currently conducting a review of pricing policy and rates which should fix the rate imbalance. These two actions make the need for legislation at this time questionable at best.

    This is bad legislation for employees and retirees (which most employees will eventually be) so contact your elected officials and ask them to oppose HR 756.

  2. Does,anyone know whether this Postal Reform Act,would permit FERS current retirees and future eligible FERS annuitants to keep their supplementary payments? More importantly,will both current postal employees and retirees be permitted to keep their current health-insurance plans(for example,Blue Cross/Blue Shield);at least until,they are eligible for Medicare? These are the really important issues. So,do the postal-workers unions or USPS upper-management,have any idea?

  3. Now the tax payers will be able to afford tax cuts to business and rich people, build the wall, and purchase more military toys! Oh how great. Please take from me and give to the rich, for they need more Wealthfare. As we know the rich are destitute. Remember, Federal employees didn’t earn their benefits, they stole from the haves. Just give me some Vaseline.

  4. What a bunch of bs.

    Thanks for throwing us under the bus postal unions.

    There is NOTHING good in this bill for retired OR current postal employees.

  5. I reviewed the CBO report. Looks like the Postal Service has everything to gain if this passes. BUT (and this is a big but) medicare’s spending would increase big time. I also see that this bill will increase FEHB costs to all other federal agency’s and their employees. Since the Postal Service will be the first agency to have their own health plans separate of FEHB could set a precedent for other Federal agencies to follow, causing Medicare massive increases in spending. It will be interesting to see if other Federal unions will oppose HR 756. The House Ways and Means Committee in the 114 Congress never voted on on HR 5714( 2016 version of HR 756) and let the bill die in Committee. Throw into the equation that Trump has proposed his own proposals for the Postal Service Reform and does not include the Medicare integration can further cause HR 756 to not be passed. Also complicating passage of this bill is the fact that the Republican majorities in the House and Senate are bogged down with trying to pass their own versions on health care and working on the budget.

    Be sure to contact your elected officials in the House And Senate asking them to vote no on HR 756.

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